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Oil Addiction Part 1

Oil addiction is very real in our world, and it holds just as true in the Unites States. In this post, we are going to talk about how much this addiction costs the U.S. and much of this is cost we may not really see in every day life. For example, we see the gas prices, but we don’t see how those prices are insulated by the government.

Did you know we pay large amounts of subsidies to oil companies, and by large I mean close to 40 billions dollars? In 1998 we subsidized over 100 billion just in relation to the auto industry, and all for the illusion that gas is cheap in the U.S. Now I am not saying every dollar in subsidy is bad as the oil and gas industry provides a significant amount of jobs in America, but we should at least be cognizant that we pay that much money for fuel that provides residual costs. Even more than that, the gas taxes we have pale in comparison to the rest of the developed world. Together, we have this idea that gas and oil is not costing very much and that cleaner fuel sources are requiring too much subsidy to work. How would we feel about gas if we had $8.00 a gallon prices?

The last point I want to make in this post are in regard to the hidden costs of oil. The two I will reference are in regard to climate and security. How much is a clean environment worth? We talked about the role that transportation emissions play in our world, and that is almost entirely from oil/gas. To quantify this thought, a study done in the UK by New Economics Foundation in 2006 found that if we attached an estimated cost of climate concerns to oil, the study attached $35/ton for carbon dioxide, that we would have a bill of 56 trillion dollars a year, just for oil. Of course, this is not necessarily completely accurate but even with a wide standard error of the estimated cost the bill is significant. A brief point on security is in relation to the cost of imported oil and where that money goes. In 2008, we spent close to 400 billion dollars importing oil, a significant amount going to OPEC and thereby funding some shaky or questionable governments and providing geopolitical power to a region that has proven to provide volatility to international politics. As I am writing this, I think we should spend more time on this subject and so in other posts we will get much more in depth on the issue of oil addiction and what is the costs. So make sure to come back and visit next week, as we will explore this further.